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#262: How to deal with good and bad trades

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How to deal with good and bad trades

In this weekly video:
00:26 – Trading phycology and the mental aspect of trading
01:19 – The good and the bad side
01:35 – When trades go wrong
02:30 – Fantastic when your winning
03:31 – What can you do when you are losing trades?
04:31 – 6 out of 7 winning trades on the Daily charts this week
05:38 – Consistency is key to success
06:15 – Control your risk per trade and control your emotions
06:55 – Look at the bigger picture
07:49 – Contact me if you need further help

Trading psychology is a really important part of trading. How do you deal with good and bad trades? Let's talk about that and more right now.

Hi, traders. It's Andrew Mitchem here, The Forex Trading Coach, video and podcast number 262.

Trading phycology and the mental aspect of trading

Now, trading psychology, all about the mind, it's a really, really underrated and overlooked part of trading. You see, everybody wants to get into the nitty-gritty of the actual trading strategy and how to make money, but the reality is that good trading, a large part of it comes down to your mental approach because after all we're talking about emotions. We're talking about making and losing money, real money and it hurts or it's fantastic depending on which side of the trade you're on.

Let's talk about the two different approaches, really, and also with the bad side, how I can give you some help and information from my personal experience to help you overcome that.

The good and the bad side

When you have losing trades, all of a sudden, everything feels terrible and you know what I mean because you've certainly been there. All traders go through it. I still go through it after trading for years and years. But there are some things I can help you with.

When trades go wrong

When trades go wrong, you start to have doubt in your system, doubt in your own ability, and it just all feels horrible. You see what you think are good setups and trades just go wrong because after all trading is not an exact science. It's about probability. Not all the time are your really nice set up is going to work 100%. You start having doubt and some people then, especially new traders, they start having anger, frustration, fear, all those types of things. Some people want to just get back at the market and they start doing really stupid things. They'll take silly position sizes. They'll start doubling up a position. They'll take a trade just because I want to take a trade and get my money back, all those kind of crazy things. Especially when you're new, that is something that is very easy to fall into.

Fantastic when your winning

Take the opposite side of that scale and you take a series of winning trades and, all of a sudden, life is fantastic. You're making money. You're seeing lots of profit whether you're using MT4, lots of green lights. You're hitting your profit targets and your cash is growing beautifully. The danger then is you can become very blasé about your trading, almost like indestructible, almost like that teenager mentality where I can drive a car really fast because I know what I'm doing and it never happens to me and it's a thrill, all those types of things. We've all been teenagers and many of us have teenagers as children and you know that little bit of knowledge can be very, very dangerous, that kind of approach and that can become a problem when you have some winning trades is that the whole mental part goes out the window because you just think that every trade you take is going to be a great trade. Of course you know the answer. You're going to get hit really badly.

What can you do when you are losing trades?

Going back to the losing side of things, what can you do? Well, first of all, it's important to be mentally focused. It's important to be disciplined, to be trading at the same times of the day, to be trading the same set ups, the same timeframe charts. Whatever it is that you do in a good run, do the same because the market will always come back. It will always change. Maybe your strategy requires the market be trending really strongly and right now the market is not trading strongly. Well, what can you do? You may not see very many trades so you reduce the number of trades you take. You keep your risk portrayed very low. You might want to look at different timeframe charts. As an example, I sometimes go down to a four hour chart. If the one hour charts aren't producing very much, maybe go to a 6 or 12 hour chart because different timeframe charts will show different type of set ups and trends depending on the market conditions.

6 out of 7 winning trades on the Daily charts this week

Likewise with winning trades, well, this week, I've had an amazing week. On my daily trade suggestions that I make for all of my clients on our membership site, we've had six out of seven winning trades. That by risking only a quarter of 1%, 0.25% risk on each of those seven trades, my clients this week, and we still got one day to go, are up 2.8% with extremely low risk, only a quarter of 1% risk per trade, 2.8% gain. All I'd done is spend probably 10 minutes in the first four days of this week just by looking at the membership site and copying exactly what I've taken and why. It's a learning process there. Winning trades, yes, it's fantastic and really well for this week. I'm up almost 5% for the week in total daily trades plus other timeframe charts. It's great and I'm feeling really good about it, but it doesn't get to my head because I know that there will be weeks around the corner, maybe next week that things aren't quite as good. You have a smaller winning week or you have a losing week.

Consistency is key to success

Consistency is the key. With my daily trades, every since 2009, I've posted on my membership site everyday almost without fail unless I've been away or ill or something. But almost everyday since 2009 I have posted the daily trades at exactly the same time because I work off the 5:00 p.m. New York close of day. It's consistency. I make a massive effort. It doesn't matter where I am in the world or what I'm doing, I will always post those daily trades on that membership site because I like to take my trades base of that 5:00 p.m. New York close of day chart. Consistency is important.

Control your risk per trade and control your emotions

The amount of risk you take is important. The type of setups. I'm only really looking for two types of setups on the daily charts. I'm looking at continuation pattern or I'm looking at a reversal pattern. It's really, really simple. If I don't see those, if I see just the market going sideways, indecision candles, et cetera, move on to the next currency pair because there's nothing to take. Don't trade just for the sake of trading. It's really important that you have consistency. Keep your emotions under control. Don't get too excited when things go really well. Don't get too down when things don't go well because the market will always change and have confidence in your ability and in your strategy.

Look at the bigger picture

Look at the bigger picture. Don't just think, “Oh, what happened this week? Oh, no. I have an awful week.” Or, “Fantastic. I have a great week.” Because it's more about what happens to this month or what happens to this quarter, what happens this year because you will get ups and downs. It doesn't matter how good or bad a trader you are.

You might think you're the best trader on the planet. You're still going to get losing times. It's really important to have consistency, control of your emotions and of course like a lot of things come … Going back to driving the car analogy, it comes with experience. You can't expect to be a brand new trader and have all these emotions under control and things because it takes time like anything good in life takes time to master. But stick at it and you will find that with consistency and confidence in your system and yourself, you'll have fantastic gains.

Contact me if you need further help

If you need help with any of that, just email me [email protected] or use any of the links, the contact links on my website and I'll be pleased to help you.

This is Andrew Mitchem, The Forex Trading Coach. Have a great weekend. I'll see you this time next week. Bye for now.

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